Bush Foreign Policy and the Failing Stock Market

by Jon Basil Utley

Unending
war, sacrificing free trade, breaking with Europe and telling allies to shove
it, spending his time on planning a new war, neglecting domestic issues, making
America the enemy of the whole Moslem world, disaffecting his Republican base,
fumbling the battle against terrorism, and more. No wonder the stock market is
afraid. World prosperity is necessary for American prosperity and history teaches
that wars always drive the market lower.

A former
Reaganaut warns, "The way things are going, it will soon be the United States
against the world." That comment, by a top political leader in Kuala Lumpur, was
just one of hundreds of expressions of a new and disturbing alienation from America
that I heard during a recent swing through 14 Asian, European and Latin American
capitals.

What
a contrast to the supportive attitudes abroad immediately after Sept. 11! Then,
the sometimes anti-American French journal Le Monde captured the world's
sentiment with a headline proclaiming: "We are all Americans." Ten months
later, sympathy for the victims of the terror attacks remains. However, the American
image is increasingly perceived as ugly, and support abroad for U.S. policies
is plummeting.

Bush's
speech at West Point that threatened dozens of nations with American bombing
attacks totally ignores what such threats mean to world trade. This threat could
make American civilians overseas counter targets of terrorists all over the world.
Already the jokes are beginning about President Bush appalling ignorance of the
world. He allegedly told Tony Blair that he now knew the reason the French economy
did not do better: the French language lacks a word for "entrepreneur."

Moreover,
columnist Paul Craig Roberts
warns, "It is absurd for the Bush Administration to spend so much time on
Afghanistan, Palestine and Iraq when its position in the world rests much more
on its stock market than on its armaments….Today, Washington is focused on wasting
resources on wars…."

New
enemies are being created. Foreign Affairs (July-August 2002  "Is Southeast
Asia the Second Front?" by John Gershman) warns that a military approach
to the region's problems could weaken local democracies and turn neutral forces
into new enemies. This is further reinforced by Washington's foreign policy, which
appears to parallel the interests of the Arms
Lobby and Christian
Right Armageddonites. Meanwhile China is on notice that it may be our next
target under the Wolfowitz Doctrine. The Defense
Department Deputy Secretary, who now appears as the main spokesman for Bush foreign
policy, argues that no other major regional power may be permitted to arise. Thus,
we are on the verge of making China into an enemy as well as much of the Muslim
world.

Fortune
Magazine warns that the market is nervous about a Bush attack on Iraq, specifically
because there is no rational thinking or discussion in Washington about the consequences
post-"victory". For Bush's worldly advisor Dick Cheney that is nothing
new. Twelve years ago, before the first attack on Iraq he was asked, "What will
we do after we win?" His answer – "Well, I don't know, we haven't thought much
about that." Well the stock market is thinking about it. The unknowns include
possible destruction of oil production, further alienation of other Muslims by
killing tens of thousands more Iraqis, possible overthrow of the Saudi government
and other chaos.

The
greatest threat is the collapsing consensus in Washington for free trade. Bush
steel tariffs and his complementary caving in to new agricultural subsidies are
serious threats against international trade. These policies weaken the pro free
trade constituency. In response to these policies, Europeans have threatened
reprisal tariffs. Supply sider Jude Wanniski made his first mark as a young economist
researching how the stock market crash of 1929 came about the
day after the coalition to block the Smoot Hawley tariff fell apart in Congress.
Interestingly, like today, in 1929 the newspapers failed at first to recognize
that the crash was for foreign policy reasons.

The
President, like his father before him, is so preoccupied with war and foreign
interventions that he and his top staff are neglecting vital domestic policy battles,
and scaring the American public in the process. Fortune Magazine foresaw
that threat last October:

"A
Fortress America mentality in security matters could spill into economic ones...a
short hop from nationalism to protectionism...all sorts of parochial interests
in the U.S. are much more likely to get the upper hand."

Bush's
call for a Homeland Defense reorganization of tens of thousands of government
workers may bring chaos to the functioning of many government bureaus; a fear
of many businesses which depend upon smooth functioning, e.g. customs procedures.
This impending dilemma is analyzed
in the Washington Post.

The
Bush White House is noted for its "go it alone" foreign policy with no considerations
for our Allies on issues such as trade, attacking Iraq, the World Court and so
on. Powell, the only Administration counter weight, has caved in to the Neo-conservative
"empire hawks." World markets have responded by selling off dollars
and buying Euros, another major reason for declining stocks. Every time Bush
makes a speech on the stock market, stocks drop further. Monday's big crash was
the final warning. War is bad for the stock market and unending war is worse.
But making war can be exciting and almost addictive for those who don't suffer
from it. Bush is so keen to launch a new war (on Iraq) that he ignores what is
vital here at home. Markets can recover from an Enron or a WorldCom, but not from
catastrophic foreign policies.